World

Italy's Renzi says Europe must boost growth

STRASBOURG France (Reuters) - Prime Minister Matteo Renzi kicked off Italy's six-month spell in the rotating presidency of the European Union with a fresh call for action to boost economic growth in the 28-member bloc.

Renzi has led calls for Europe to move from budget austerity towards expansion but in his speech to the European Parliament in Strasbourg he repeated that Italy was a net contributor to the European Union budget and was not looking for "short cuts".

He made only passing reference to the discussion at last week's European Council in Brussels at which EU leaders agreed that countries which undertook structural reforms should be allowed more leeway on tight EU budget rules.

"Italy is not coming here to ask for change which it is not able to provide itself, Italy is coming here to say it wants to change," he told the parliament.

"The economic issue we are living though and the discussions we had in the last Council can't be reduced to an issue of one country asking the others to change the rules. We were the first to say we will respect the rules."

Renzi said the EU's budget rules were based on "a pact called the Stability and Growth Pact. There's stability but there's also growth ... without growth, Europe has no future."

In a television interview later on Wednesday Renzi said he favoured the introduction of bonds backed by all euro zone states and that he expected support on this from the future European Commission president, Jean-Claude Juncker.

"Before, Juncker said was in favour of euro bonds. I imagine that having changed his job he hasn't changed his mind," Renzi told state broadcaster RAI, in reference to a proposal repeatedly rejected by Germany and other northern European states.

BERLUSCONI MEETING

After taking office at the head of a cross-party government in February, Renzi has pledged to reform Italy's stagnant economy and overhaul its widely criticised system of politics and government administration. But he has still to complete any of the ambitious reform he has promised.

Renzi told RAI that on Thursday he would meet separately with centre-right leader Silvio Berlusconi and a delegation from the anti-establishment 5-Star Movement to continue discussions on proposed changes to the electoral law and the abolition of the Senate as an elected chamber.

Peppering his speech to the European Parliament with literary and cultural references from the Odyssey to Dante and offering few specifics, Renzi said Europe needed to find its identity and self confidence again after its years of crisis.

"If Europe took a selfie today, what would come out?" he asked," saying the image would be one of tiredness and in some cases resignation. "If I had to sum it up, I'd say Europe would look bored."

Italian officials have said Renzi is intent on shifting the terms in which the economic policy debate in Europe is conducted but he faces scepticism from countries, including Germany, which insist on the importance of budget discipline.

Answering Renzi's speech, Manfred Weber, a German who is leader of the centre-right EPP group, said that "more flexibility would be the wrong way forward".

"The right road is sustainable finances," he said.

Weber also argued it would be wrong to give more time to Italy or France to abide by debt and deficit rules. "What will we say to Spain, Portugal or Ireland?" he said, referring to the fiscal rigour imposed on them under their bailout programmes.

(Writing by James Mackenzie; Editing by Catherine Evans and Robin Pomeroy)